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Oct 16, 2012

LONDON (MarketWatch) — Spain led European stocks to higher ground
Tuesday, with banks pacing gains after reports suggested the country is
one step closer to making a formal bailout request and may get Germany’s
support.

The Stoxx Europe 600 index XX:SXXP+1.32%
jumped 1.3% to close at 274.38, its best daily performance since Oct. 1.

Refugees to Turkey top 100,000
Turkey says the number of Syrian refugees housed in camps in the south of the country has exceeded 100,000, a level Ankara previously described as a “psychological limit."

“It’s all related to the bailout,” said Predrag Dukic, senior equity sales trader at CM Capital Markets in Madrid.

“People believe the Spanish bailout is closer now after Germany
indicated they were open for a precautionary line of credit and that is
helping push stocks higher today.”

Spain occupied investors’ minds after media reports said late Monday
that Madrid is ready to formally request financial aid but that
officials are delaying an announcement because of concerns about the
effect on other euro-zone countries. A formal bailout request is
necessary for Spain to allow the European Central Bank to buy its
sovereign debt.

In Madrid, the IBEX 35 index XX:IBEX+3.41%
rallied 3.4% to 7,940.20, the biggest jump since early September.

“A move like today suggests that we are pricing in a bailout, and the
more we rally now” the less room there will be for gains after a
decision is made, Dukic said.

“But I do certainly believe that if we get a bailout or precautionary credit line the market will move higher.”

Banks posted some of the biggest gains in Spain, shrugging off a recent
round of ratings downgrades by Standard & Poor’s Ratings Services.
The credit rating agency cut 15 of the country’s banks following a
sovereign credit downgrade earlier this month.

“U.S. earnings are very encouraging and supportive to global markets.
We’ve seen the [International Monetary Fund] and other world economic
institutions suggesting that we are in a recession and then these
companies come out with positive results. It gives us hope that not all
is lost in the global economy,” CM Capital Markets’s Dukic said.

Data out of Germany, the largest European economy, also attracted
investors’ attention. The ZEW expectations index rose to minus 11.5
points in October from a reading of minus 18.2 in September, beating
analysts’ estimates.
See: German ZEW investor expectations gauge rises

Stocks Rally In Reaction To Latest Earnings News 10/16/2012 12:15 PM ET
Stocks have shown a strong upward move over the course of the trading
day on Tuesday, adding to the gains posted in the previous session. The
markets have benefited from a positive reaction to the latest batch of
earnings news.
The major averages have moved roughly sideways in recent trading, hovering near their best levels of the day. The Dow is up 120.26 points or 0.9 percent at 13,544.49, the Nasdaq is up 28.80 points or 0.9 percent at 3,092.98 and the S&P 500 is up 12.96 points or 0.9 percent at 1,453.09.
The strength on Wall Street comes
on the heels of the release of quarterly results from some big-name
companies, including financial giant Goldman Sachs , which reported
better than expected third quarter earnings.
Goldman Sachs
reported adjusted third quarter earnings of $2.85 per share compared to a
year-ago loss of $0.84 per share, while analysts had expected earnings
of $2.12 per share. Shares of Goldman Sachs are up by 0.8 percent on the
news.
Beverage giant Coca-Cola also reported third quarter
earnings that came in slightly above analyst estimates but on weaker
than expected revenues.
Johnson & Johnson reported third
quarter earnings and sales that exceeded analyst estimates and also
raised its full-year guidance.
Traders are also digesting news
that health insurer UnitedHealth raised its full-year guidance and that
online retailer Amazon is hiring for more than 50,000 seasonal positions
this holiday season.
Shares of Citigroup (C) are also in
focus after the financial giant announced that Vikram Pandit has stepped
down as the company's Chief Executive Officer and as a member of the
Board.
Citigroup also said its board has unanimously
elected Michael Corbat as CEO and a director of the Board. Corbat
previously served as Citigroup's CEO of Europe, Middle East and Africa.
Separate
reports showing a rebound by industrial production and a continued
increase by homebuilder confidence may also be contributing to the
strength on Wall Street.
The Labor Department also released a
report showing that consumer prices rose by slightly more than expected
in the month of September due to another jump in energy prices.
Sector News
Steel stocks have moved sharply higher over the course of the trading day, driving the NYSE Arca Steel Index up by 2.4 percent. With the gain, the index has risen to its best intraday level in almost a month.
Cliffs Natural Resources and Olympic Steel are turning in two of the steel sector's best performances, surging up by 6.5 percent and 5.8 percent, respectively.

10/16/2012 12:15 PM ET Oil service stocks are also seeing considerable strength on the day, with the Philadelphia Oil Service Index up by 1.9 percent. The strength in the sector comes in spite of a modest decrease by the price of Crude oil.
Semiconductor,
electronic storage, gold, and chemical stocks are also posting notable
gains, moving higher along with most of the major sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index surged up by 1.4 percent, while Hong Kong's Hang Seng ended the day up by 0.3 percent.
The major European markets also showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 1.1 percent, the German DAX Index jumped 1.6 percent and the French CAC 40 Index soared 2.4 percent.
In
the bond market, treasuries have come under pressure amid the strength
on Wall Street. Subsequently, the yield on the benchmark ten-year note,
which moves opposite of its price, has risen by 5 basis points to 1.713
percent.

Canadian Market

CADUSD

Oil

Gold

Allbanc

Please click on the images to view our interactive charts

Commodities, Data Lift TSX Tuesday Morning

Canadian
stocks were trading higher Tuesday morning amid steady commodities,
with better-than-expected U.S. retail sales and inflation data, and
easing concerns about a Greek exit from the euro zone bolstering
investors' appetite for risk. Furthermore, a key survey from across the
Atlantic revealed German investor confidence improved for a second month
in October.

Today's data from south of the border also came in
encouraging, with US homebuilders confidence rising to a new six-year
high and industrial production moving up in the month of September.

The price of gold was
recovering from its one-month low Tuesday morning as the U.S. dollar
was struggling versus a basket of currencies amid the release of
inflation data. Gold for December added $8.50 to $1,746.10 an ounce

Meanwhile, metals mining company Lithium Americas Corp. (LAC.TO)
lost over 3 percent after reporting first-quarter net loss of $1.2
million or $0.02 per share, compared to $2.1 million or $0.02 per share
last year.

Gold miner Petaquilla Minerals (PTQ.TO) slipped 2 percent after it said its rejected the hostile offer by Inmet Mining Corp. (IMN.TO)
to acquire all of its outstanding common shares in exchange of 0.0109
Inmet shares and $0.001 in cash; or a amount not more than $0.48 per
Petaquilla share.

In economic news, Statistics Canada said
non-resident investors acquired $6.9 billion of Canadian securities in
August, with focus turning to debt instruments from equity. Meanwhile,
Canadian investors reduced their holdings of foreign securities by $1.7
billion, following three straight months of acquisition.

Separately,
the agency revealed that manufacturing sales increased 1.5 percent to
$49.5 billion in August, the highest sales level since March 2012. The
gain largely reflected increases in the petroleum and coal products, and
motor vehicle industries. Manufacturers in 11 out of 21 industries
reported higher sales, representing over three quarters of total
manufacturing.

From the U.S., the Labor Department said its consumer price index rose
by 0.6 percent in September, matching the increase seen in August.
Economists had been expecting prices to increase by about 0.5 percent.
Excluding the jump in energy prices as well as a modest increase in food
prices, the core consumer price index edged up by 0.1 percent for the
third straight month. The core index had been expected to rise by about
0.2 percent.

Meanwhile, the Federal Reserve released a
report showing that U.S. industrial production rose by more than
expected in the month of September. The Fed said industrial production
increased by 0.4 percent in September after tumbling by a revised 1.4
percent in August. Economists had expected production to edge up by 0.2
percent compared to the 1.2 percent drop originally reported for the
previous month.

A report from the National Association of Home Builders showed that the NAHB/Wells Fargo Housing Market Index inched up to 41 in October from 40 in September. The modest increase matched economist estimates.

Elsewhere, euro zone
inflation for September was revised down to 2.6 percent from the
initial estimate of 2.7 percent, Eurostat said. The inflation rate, thus
remained steady compared to August's 2.6 percent.

U.K. annual
inflation reached the lowest since November 2009, data from the Office
for National Statistics showed. Consumer price inflation fell to 2.2
percent, in line with forecast, from 2.5 percent in August. Nonetheless,
it remains above the central bank's 2 percent target.

Meanwhile, German economic sentiment improved more than expected in October, a survey by the Center for European Economic Research
(ZEW) showed. The ZEW Indicator of Economic Sentiment increased to
-11.5 in October from -18.2 in September. This was forecast to rise to
-14.9. This was the second increase of the indicator in a row.

European Market

FTSE 100

Euronext

Dax perf

CAC 40

Please click on the images to view our interactive charts

European Markets Finished Solidly Higher On Spanish Bailout Hopes 10/16/2012 11:57 AM ET
The European markets rallied higher on Tuesday, after reports that
Spain is nearing a bailout request. The continued rise in German
investor sentiment also contributed to the positive mood. Banks were
among the best performing stocks Tuesday, despite the S&P downgrade
of a number of Spanish banks.
The Spanish government is prepared
to officially request a bailout, but the plan is being delayed due to
external factors including its possible influence on the decision of
other euro area countries such as Italy.
Financial Times
reported Monday that Spain is waiting for such issues to be resolved.
Quoting a senior official with the Spanish economy ministry, the
newspaper said the government is making the request just to satisfy the
conditions of the European Central Bank to start buying its bonds.
Spain's
borrowing costs declined at its bill auction on Tuesday as investors
expect the nation to make a formal bailout request without further
delay. The treasury raised EUR 4.863 billion from the issue of 12- and 18-month treasury bills. The amount exceeded the target range of EUR 3.5 billion-EUR 4.5 billion.
The
yield on 12-month bills fell slightly to 2.823 percent from 2.835
percent at the prior auction in September. The average yield on 18-month
bills dipped to 3.022 percent from 3.072 percent.
The Portuguese
government on Monday announced another round of austerity measures with
tax hikes and spending cuts, while the economy is forecast to enter a
third year of recession in 2013.
Presenting the details of
the draft 2013 budget, Finance Minister Vitor Gaspar said the average
income tax rate would increase to 13.2 percent in 2013 from 9.8 percent
this year.
The Ministry proposed to cut the number of income-tax
brackets to 5 from 8 and also plans to impose an extraordinary
additional surcharge on income of 4 percent. There will also be a
special "social solidarity" tax of 2.5 percent on income.
The
independent Office for Budget Responsibility on Tuesday said it has
overestimated the strength of economic growth over the last two years.
The OBR said in its forecast evaluation report that spending reduction
together with tax increases might have hurt the economy more than
initially estimated.
The euro Stoxx 50 index of Eurozone bluechip stocks increased by 2.50 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, advanced 1.33 percent.
The DAX of Germany climbed by 1.58 percent and the CAC 40 of France gained 2.36 percent. The FTSE 100 of the U.K. rose by 1.21 percent and the SMI of Switzerland added 1.04 percent.

10/16/2012 11:57 AM ET In Frankfurt, Commerzbank gained 4.15 percent and Deutsche Bank finished higher by 4.95 percent.
In Paris, Societe Generale climbed by 4.00 percent. BNP Paribas rose by 4.40 percent and Credit Agricole added 5.53 percent.
LVMH
Moët Hennessy Louis Vuitton rose by 3.63 percent. The company said that
its total revenue for the first nine months of 2012 rose 22 percent to
EUR19.87 billion from EUR16.30 billion in the same period last year.
In London, mining stocks were among the positive performers. Rio Tinto increased by 2.94 percent and BHP Billiton gained 1.40 percent. Kazakhmys rose by 2.97 percent and Antofagasta finished higher by 1.83 percent.
Petropavlovsk gained by 3.16 percent, after the company announced that gold production in the third quarter increased by 39 percent.
Barclays climbed by 3.84 percent and Lloyds Banking Group added 5.96 percent. Royal Bank of Scotland rose by 4.21 percent and HSBC advanced by 1.95 percent.
GKN declined by 3.41 percent, after the company's third quarter results came in lower than in the previous year.
Roche finished with a gain of 0.38 percent in Zurich, after posting higher sales of CHF 11.27 billion for the third quarter.
UBS
closed higher by 3.0 percent. Chief Financial Officer Tom Naratil said
the Swiss bank fired as many as 550 employees after suffering a $2.3
billion loss from unauthorized trading last year.
Eurozone
inflation for September was revised down to 2.6 percent from the initial
estimate of 2.7 percent, Eurostat said Tuesday. The inflation rate thus
remained steady compared to August's 2.6 percent.
Eurozone
exports grew by seasonally adjusted 3.7 percent in August from a month
ago, when it fell 2.2 percent, Eurostat reported Tuesday. Likewise,
imports rose 2.1 percent, reversing last month's 0.8 percent drop.
The trade surplus totaled EUR 9.9 billion in August, up from EUR 7.2 billion in July. Meanwhile, on an unadjusted basis, the trade surplus fell to EUR 6.6 billion from EUR 14.7 billion in the prior month.
German
investor sentiment rose for a second straight month in October, with
the risks faced by the economy abating somewhat in the recent weeks, a
key survey revealed Tuesday. The ZEW Indicator of Economic Sentiment
increased to -11.5 in October from -18.2 in September. This was forecast
to rise to -14.9.
U.K. annual inflation reached the lowest since
November 2009, as last year's increase in utility prices dropped out of
the annual comparison in September. Consumer price inflation fell to 2.2
percent in September, in line with forecast, from 2.5 percent in
August, data published by the Office for National Statistics revealed
Tuesday.

10/16/2012 11:57 AM ET
Output price inflation in the UK accelerated unexpectedly in September,
data released by the Office for National Statistics showed Tuesday. The
output price index for home sales of manufactured products rose 2.5
percent year-on-year in September, compared with a rise of 2.3 percent
in the previous month. Economists expected the rate of increase to slow
to 2.2 percent.
On a monthly basis, the price index rose 0.5
percent. This compares with a rise of 0.5 percent between July and
August. Economists had forecast a 0.3 percent rise in the index in
September.
Consumer prices in the U.S. rose by slightly more than
expected in the month of September, according to a report released by
Labor Department on Tuesday, with the price growth largely due to
another jump in energy prices.
The Labor Department said its
consumer price index rose by 0.6 percent in September, matching the
increase seen in August. Economists had been expecting prices to
increase by about 0.5 percent.
With utilities output showing a
notable rebound, the Federal Reserve released a report on Tuesday
showing that U.S. industrial production rose by more than expected in
the month of September.
The Fed said industrial production
increased by 0.4 percent in September after tumbling by a revised 1.4
percent in August. Economists had expected production to edge up by 0.2
percent compared to the 1.2 percent drop originally reported for the
previous month.
Homebuilder confidence in the U.S. edged
slightly higher in October, according to a report released by the
National Association of Home Builders on Tuesday, with the increase
lifting homebuilder confidence to a new six-year high.
The report
showed that the NAHB/Wells Fargo Housing Market Index inched up to 41 in
October from 40 in September. The modest increase matched economist
estimates.

Asia Market

Asian Markets Trade Higher On Wall Street Cues 10/15/2012 11:42 PM ET Asian stock markets are trading firm on Tuesday with the overnight surge on Wall Street on
the back of an upbeat retail sales report buoying up sentiment to a
significant extent. Though some of the markets are trading off their
earlier highs, the mood remains fairly upbeat.
The Australian
market started off on a high note with investors indulging in some brisk
buying at several counters, but pared a substantial portion of its
gains past noon with the mood turning slightly cautious at higher
levels.
Financial, consumer staples, healthcare, industrial and
information technology stocks are mostly up with strong gains. Energy,
mining and property trusts stocks are trading mixed.
The benchmark S&P/ASX 200 index,
which advanced to around 4,517, is currently trading at 4,496, up 12.6
points or 0.3 percent from its previous close. The broader All Ordinaries index is up 12.5 points or 0.3 percent at 4,518, nearly 20 points off the day's high of 4,537.9.
Among bank stocks, ANZ Bank, Commonwealth Bank of Australia and Westpac are up 0.2 to 0.6 percent, while National Australia Bank is trading higher by 1.5 percent. Bendigo & Adelaide Bank and Bank of Queensland are also trading firm.
Top miners BHP Billiton (BHP, BBL) and Rio Tinto (RIO) are trading lower by 1 percent and 1.4 percent, respectively.
Lend
Lease Group shares are up nearly 5 percent following an announcement
from the company that discrepancies in its construction company
Abigroup's accounts were a one-off item and will not affect its
financial results.
Perseus Mining announced that sales for
the September quarter were 4.7 percent down on the previous quarter, due
to a 2.7 percent drop in gold prices.
Fortescue Metals,
Leighton Holdings, Bluescope Steel, ALS, Aristocrat Leisure and QBE
Insurance Group are up 2 to 2.6 percent. Fairfax Media, Alumina , AMP, Aurora Oil & Gas, CFS Retail Property Trust and Cochlear are also trading notably higher.
Meanwhile, Regis Resources, Oil Search, Boart Longyear and Lynas Corporation are trading lower, losing 1.4 to 3.2 percent.
According
to data released by the Australian Bureau of Statistics, personal
finance loans declined by 3.3 percent to A$7.220 billion in August from a
downwardly revised A$7.469 billion in July.
Total commercial
loans in August fell 5.2 percent to A$27.591 billion,
seasonally-adjusted, from A$29.098 billion in July. Lease finance was
down 5.1 percent from the previous month to A$528 million, while housing
finance for owner occupiers rose 1.3 percent to A$13.647 billion.

10/15/2012 11:42 PM ET The Japanese stock market is trading firm, with upbeat U.S. retail sales data and the yen's decline against the U.S. dollar triggering some strong buying at several front line counters.
Steel,
non-ferrous metals, financial, communications, precision instruments,
pulp & paper and automobile stocks are mostly trading higher.
Pharmaceuticals, oil, foods and electric power stocks are trading mixed.
The benchmark Nikkei 225 index, which rose to around 8,675, was up 80.9 points or 0.9 percent at 8,658.8 at the end of the morning session.
Softbank
Corp. shares moved up by over 10 percent. The company had announced on
Monday that it will buy a 70 percent stake in U.S. mobile carrier Sprint
Nextel Corp. for about $20 billion, in the biggest-ever overseas
acquisition by a Japanese firm.
UBE Industries, Citizen Holdings, Tosoh, Kobe Steel, Credit Saison, Kuraray, Konami Corp., UNY Co. and Shinsei Bank gained 3 to 4.8 percent.
Credit Saison, Sumitomo Heavy Industries, Mitsubishi Chemical Holdings, Asahi Glass, Mitsubishi Electric, Ebara Corp., Yahoo Japan, Trend Micro, Sumitomo Mitsui Trust Holdings, Dai-ichi Life Insurance and Mizuho Financial Group were among the other big gainers.
Among the losers in the index, Kirin Holdings, Unitia, Sharp Corp.,
Dowa Holdings, Chubu Electric Power, Nippon Sheet Glass, JX Holdings
and Nippon Light Metal drifted down by 1.4 to 3.2 percent.
In the currency market, the U.S. dollar traded in the upper 78 yen range in early deals in Tokyo. The yen is currently trading at 78.76 to the dollar.
Among
other markets in the Asia-Pacific region, New Zealand, Singapore, South
Korea and Taiwan are trading notably higher. Hong Kong, Malaysia and
Indonesia are up with modest gains, while Shanghai is up marginally.
On
Wall Street, stocks moved mostly higher on Monday with traders reacting
positively to an upbeat retail sales report. Citigroup's
better-than-expected results too aided sentiment to an extent.
The major averages ended the session near their best levels of the day. While the Dow ended up 95.4 points or 0.7 percent at 13,424.2, the Nasdaq rose 20.1 points or 0.7 percent to 3,064.2 and the S&P 500 climbed 11.5 points or 0.8 percent to 1,440.1.
Major European markets too closed higher on Monday. While the U.K.'s FTSE 100 index edged up by 0.2 percent, the German DAX and the French CAC 40 Index gained 0.4 percent and 0.9 percent, respectively.
U.S. Crude oil pared
much of the losses but still ended a penny lower on Monday, after
overcoming demand growth concerns linked to the tension between Turkey
and Syria.

10/15/2012 11:42 PM ET
Oil prices pared losses after some encouraging macroeconomic data from
the U.S. and China lifted global equity markets, with the dollar coming off the session's high over the Middle East imbroglio.
Crude for November delivery shed $0.01 to close at $91.85 a barrel on the New York Mercantile Exchange.

Forex Market

USDCAD

USDEUR

USDGBP

USDJPY

Please click on the images to view our interactive charts

10/16/2012 10:28 AM ET With
utilities output showing a notable rebound, the Federal Reserve
released a report on Tuesday showing that U.S. industrial production
rose by more than expected in the month of September.
The Fed
said industrial production increased by 0.4 percent in September after
tumbling by a revised 1.4 percent in August. Economists had expected
production to edge up by 0.2 percent compared to the 1.2 percent drop
originally reported for the previous month.
The rebound by
industrial production was partly due to a 1.5 percent jump in utilities
output in September, which came after a 4.3 percent drop in August.
A resumption of activity at idled facilities along the Gulf of Mexico also contributed to the rebound in industrial production, the Fed said.
The
report said manufacturing output edged up by 0.2 percent in September
after falling by 0.9 percent in August, while mining output rose by 0.9
percent following a 1.6 percent drop in the previous month.
Robert
Kavcic, an economist with BMO Capital Markets, said, "A bounce-back in
industrial production in September provides a decent handoff to the
fourth quarter, but more broadly, the U.S. factory sector has geared
down this year."
said capacity utilization climbed to 78.3
percent in September from a revised 78.0 percent in August, coming in
line with economist estimates.
Capacity utilization in the
manufacturing sector was unchanged at 76.8 percent, while capacity
utilization in the mining and utilities sectors rose to 89.1 percent and
74.8 percent, respectively.

10/16/2012 10:40 AM ET
Homebuilder
confidence in the U.S. edged slightly higher in October, according to a
report released by the National Association of Home Builders on
Tuesday, with the increase lifting homebuilder confidence to a new
six-year high.
The report showed that the NAHB/Wells Fargo Housing Market Index inched up to 41 in October from 40 in September. The modest increase matched economist estimates.
With
the increase, the index rose for the sixth consecutive month, reaching
its highest level since coming in at 42 in June of 2006.
NAHB
Chairman Barry Rutenberg said, "Many builders are reporting increases in
the number of serious buyers visiting their sales offices, and the
overall confidence measure is much higher than it was at this time last
year."
"The concern is that, even though demand for new homes is
rising, overly tight credit conditions are still constraining new
building and new purchases at a time when that kind of economic activity
and the job growth it generates are greatly needed," he added.
The
modest increase by the housing market index came as the component
measuring traffic of prospective buyers jumped to 35 in October from 30
in September, reaching its highest level since April of 2006.
Meanwhile,
the components measuring current sales conditions and sales prospects
for the next six months were both unchanged from the previous month at
42 and 51, respectively.
The housing market index for the Western
region climbed to 49 in October from 44 in September, while the indexes
for the South and the Northeast both rose by three points to 42 and 34,
respectively.
On the other hand, the housing market index for
the Midwest dropped to 41 in October from 45 in September, offsetting
the gain seen in the previous month.
Wednesday morning, the
Commerce Department is scheduled to release a separate report on new
residential construction in the month of September.
Economists
expect housing starts to climb to an annual rate of 765,000 in September
from 750,000 in August, while building permits are expected to rise to
810,000 from 803,000.

Better-than-expected earnings from Goldman and Johnson & Johnson
and signs of progress in the Eurozone saw the FTSE 100 surge 1.2 per
cent on Tuesday afternoon.

"Global markets roared with optimism
today as investors adopted a risk-on attitude thanks to strong US
corporate results," said financial trade Shavaz Dhalla from Spreadex.
According to Thomson Reuters Starmine data, over two-thirds of US
companies that have reported earnings so far have either met or beaten
expectations.

Dhalla said: "Thus, in the context of tightening
regulations, banking scandals and countries nearing the end of their
financial tether, investors can at least take comfort in the fact that
many US companies are still managing to ride the current slowdown in
global growth surprisingly well."

Bonds in Spain
advanced today after the Treasury saw solid demand at a short-term bond
auction this morning admits expectations that the country is ready to
request a bailout. The Treasury raised €4.86bn, topping the high-end of
its €3.5-4.5bn target. Demand totalled €13.654bn overall, while yields
edged lower.

The German ZEW survey which measures
economic sentiment improved to -11.5 in October, from -18.2 the month
before and better than the -14.9 estimate.

UK CPI inflation
fell from 2.5% to 2.2% in September, in line with market expectations,
taking the rate to its lowest level since November 2009 and close to the
2% target set by the Bank of England. Bank of America Merrill Lynch
strategist John Wraith told Reuters: "Inflation numbers were in line
with expectations, which on one level doesn't mean very much but on
another level probably hardened more expectations of more QE being
announced in November."

FTSE 100: Financials & miners jump on increased risk appetite
Financial
and resource stocks were performing well on Tuesday afternoon as
investors adopted a 'risk-on' attitude on the back of improved newsflow
from the Eurozone and better-than-expected corporate results in the US. Lloyds, Admiral, Royal Bank of Scotland and Barclays were leading financials higher, while mining peers Evraz, Polymetal and Kazakhmys were also in demand.

Diversified mining group Rio Tinto rose after hailing a strong set of production results in the third quarter, while Anglo American gained after saying that the illegal occupation of its Sishen Mine has been brought to an end by police.

Heading the other way was global engineering firm GKN
after warning that macroeconomic conditions have deteriorated in recent
weeks and it was seeing evidence of softening in order books. Investec
this morning cut its price target on the stock and retained a 'hold'
rating.

Telecoms titan BT Group was higher after Nomura reiterated its 'buy' rating on the stock, saying it prefers it to Vodafone on "structural growth drivers and dividend outlook". Meanwhile, airline group IAG was a heavy faller after Liberum Capital downgraded its recommendation for the shares to 'sell'. FTSE 250: N Brown jumps after first-half beat
Internet and catalogue home shopping firm N Brown
topped the risers list on Tuesday afternoon, gaining 12% after beating
forecasts in the first half. The company reported that revenue in the 26
weeks to September 1st came in at £379.3m, up 4.3% on the year and
ahead of the consensus estimate of £371.7m.

Chip group Imagination Technologies was also a high riser after both Liberum Capital and Numis upgraded their ratings on the stock.

Oil group Ophir Energy
was the worst performer of the day after Deutsche Bank downgraded the
stock to 'sell' and cut its price target from 565p to 505p.

High Street betting firm William Hill gained after agreeing on a revised and increased possible offer with GVC for Sportingbet.

Thermal processing services provider Bodycote
was in demand after buying US-based Carolina Commercial Heat Treating
from Bluewater Thermal Solutions for $68m. The company also said it was
trading line with expectations in the most recent quarter.

UK housebuilder Bellway
was also a high riser after delivering a solid increase in full-year
pre-tax profit, helped by a strong performance in London, and said
reservations since July 31st have remained in line with expectations.

Europe midday: Germany may be open to a precautionary credit line for Spain

-Germany may be open to granting Spain a precautionary credit line -Reports -Contradictory reports on whether Spain will ask for a bail-out -Some Euro zone banks regaining access to unsecured funding-Barclays -Spanish 10 year bond yields down 5bp to 5.77 per cent

The major European equity benchmarks are now registering large gains.
That following reports that Germany may be open to granting Spain a
precautionary credit line. Also adding to the favourable sentiment, The Financial Times
wrote this morning that Spain may be close to asking for a bail-out.
However, it added that it is being delayed by considerations put forth
by Germany and by worries over what the repercussions of that could be
for Italy.

Bloomberg is also casting a spotlight on
Spain today. However, it was earlier reporting that Spain's PM believes
that holding out for longer will win the country better terms, similar
to what other reports seem to be pointing to yesterday.

Meantime, S&P
has further cuts its long term credit ratings on 11 Spanish banks and
short - term rates on four. This is normal as financial institutions'
credit ratings are usually linked to the sovereign's by means of the
so-called zero coupon curve.

The Spanish Treasury has sold
4.86bn euros in 12 and 18 month bills this morning, more than the 4.5bn
which had been expected and at lower rates than the last time around.

Car sales off
Luxury group LVMH has today unveiled a further slowdown in comparable sales growth in the third quarter, to 6%.

Registrations plummeted 11% to 1.13m vehicles last month from 1.27m a
year earlier, according to data out from the Brussels-based European Automobile Manufacturers' Association (ACEA). It was the 12th consecutive monthly drop and the biggest decline since October 2010.

As an aside, The Telegraph was reporting this morning that French
business leaders are in a state of near panic over the seriousness of
the current financial crisis.

From a sector stand-point the
best performance is now to be seen in shares of the following industrial
groups: Banks (2.05%), Technology (1.93%) and Insurance (1.69%). Better than forecast economic numbers

Eurozone consumer prices for the month of September have come in at a 2.6% year-on-year rate of change (Consensus: 2.7%).

The German ZEW Institute's investor sentiment index for the month of
September increased to -11.5 points, after -18.2 points in the month
before (Consensus: -14.9). Slight gains in other asset classes

The euro/dollar is now up by 0.84% to the 1.3056 dollar mark.

Front month Brent crude futures are falling by 0.294 dollars to the 115.46 dollar mark on the ICE.

US Market Report

US mid-morning: Stocks at day's best levels

-Citi board ousts Pandit over poor execution-Bbg -Two German lawmakers support precautionary credit line for Spain

Dow Jones Industrial: 0.87% Nasdaq Comp.: 0.97% S&P 500: 0.89%

The main US equity benchmarks are trading comfortably higher,
apparently benefitting from reports and hopes that Spanish authorities
may be making progress towards asking for a full rescue programme from
their European partners.

Also helping stocks, undoubtedly, is
the release of several better than expected quarterly earnings reports
today from the likes of Johnson&Johnson, United Health, and Goldman Sachs as well as generally better than expected macroeconomic data.

As regards Goldman Sachs,
the Wall Street giant has announced third-quarter net income of
$1.51bn, or $2.85 per share (Consensus: $2.28), compared with a loss of
$393m, or 84 cents, versus a year earlier.

Results from Coca Cola and State Street, on the other hand, came in 'mixed.'

HCA and Murphy Oil have both announced special dividend payments today. The latter has also unveiled a $1bn share buy-back programme.

Not to be lost sight of, IBM and Intel will publish their latest quarterly results after tonight's close.

Citigroup
has turned around and is now moving higher despite the surprise
resignation of its Chief Executive, Vikram Pandit. Worth pointing out in
this regard, Bloomberg is now reporting that he was in fact ousted over
his performance.

Slightly better than expected data-points

US core consumer prices rose at a 2.0% year-on-year clip in September, as expected.

Meantime, US industrial production rose by 0.4% month-on-month in
September (Consensus: 0.2%). Compensating the above, in part, previous
months' data for manufacturing sector output was revised down.

Long-term capital inflows increased to $90b in August (Consensus: $45.3bn), after $67.2bn.

The NAHB home-builder sentiment index gained 1 point, to 41 points, in September, its highest level since June 2006.

Front month West Texas crude futures are now up by 0.02% to the 91.86 dollar mark on the NYMEX.

10 year US Treasuries are also moving lower, by 14/32 dollars, with yields at 1.71%.

Credit Suisse analysts have downgraded Hargreaves Lansdown to 'underperform' from 'neutral' but have raised their price target for the stock from 480p to 655p.

The Swiss bank believes that the shares, trading at an all-time high
(up 70% year-to-date), and on a calendar year price earnings ratio of 23
are up with events.

Moreover, the regulatory uncertainty from
the retail distribution review has the potential to disrupt the current
pricing model, consume management time and raise operational costs.

Nomura kept its 'buy' rating for telecoms giant BT Group
on Tuesday saying that, while first-half results are likely to be hit
by the economic downturn, it still prefers the business over sector peer
Vodafone (rated 'neutral').

The broker said: "BT has
not re-rated against VOD on price-to-earnings grounds in the last two
years despite superior EBITDA growth and guidance that implies more of
the same.

"Unless VOD can secure an increased US dividend, we
expect investors to focus on consolidated operations in the near term,
and we support a tighter valuation discount for BT."

Investec has trimmed its target for engineering group GKN
after its Driveline division suffered from a worse-than-expected
weakening in automotive demand and associated operational issues.

Investec has maintained its 'hold' rating for GKN and reduced its target from 240p to 224p.

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